Details: Google will now allow advertisers to bid on trademark terms, even if they don’t own the trademark, so, for example, a local hardware store can bid on “Buy Makita Saws here” or Best Buy could bid on “Best Prices for Sony Plasmas”.

Also, Google has opened up bidding on trademarked terms – so that competitors can bid on their rival’s terms. It has been allowed in just four countries – US, UK, Canada, Ireland – but now will be allowed in 190.

Both moves mean more revenue for Google. Of course, the company says it’s doing this “in an effort to improve ad quality and user experience.” Which in fact, is true.

But…it also can be read as a sign that the company is doing what all large companies do: fine tuning its profit machine to yield more revenue.

One analyst, Ben Schacter at Broadpoint, put it this way in an email flash note sent out to press and clients:

The bottom line is that these two changes will be positive revenue drivers when allowed and into 3Q and beyond, however, we believe trademark holders will undoubtedly, and loudly, raise legal challenges.

Both moves mean more revenue for Google. Of course, the company says it’s doing this “in an effort to improve ad quality and user experience.” Which in fact, is true.

John, could you explain to me how this is true?

If I am searching for “Firestone Tires”, because only tires from Firestone are relevant to me, how does it help the ad quality and user experience for me to see an ad for “Michelin Tires”?

If both Firestone and Michelin were relevant to me, I would simply type “car tires” or even just “tires”. But by specifically saying “Firestone”, I am saying that “Michelin” is not relevant. But if Google now lets Michelin pop up an ad when I type Firestone, how does this non-relevant advertisement help the user experience?

Google says it only displays relevant advertising. So how does non-relevance advertising help me, the user? And let’s even forget about any legal issues for the moment. Let’s just look at this from a relevance standpoint, which is the whole reason for Google’s existence in the first place. How is showing the user something that they specifically did not ask for, better?

I don’t think it is. And I need to see a stronger case being made, if you or Google believe otherwise.

Just clarification… Google has always allowed advertisers to “bid” on trademarked terms (advertisers might be hit with bad quality scores if those words don’t show up in the ad or on the landing page, which, until now, was disallowed). The change here is that now trademarked terms are allowed in the ad.

I believe it is fair in certain circumstances – for example, previously a car dealership couldn’t say it sold Toyotas in its ad unless it received clearance from Toyota corporate. This is why it helps the advertiser, the consumer and Google for an advertiser to mention in the ad what branded products it sells.

As far as the Firestone Tire issue mentioned by JG, the reason this is happening is because the advertiser does sell Michelin tires, however, they have a bunch of loosely-related keywords in an “Ad Group” (such as “michelin tires” and “firestone tires”) which all trigger the same ad. This is the advertiser’s sloppy organization, not Google’s. Google can’t audit all the keywords an advertiser bids on, which is why you can bid on any word you want – always have been able to.

Fine. But I still don’t get it. If I type “Firestone”, and “Michelin” appears in the ad copy, how is that relevant?

I believe it is fair in certain circumstances – for example, previously a car dealership couldn’t say it sold Toyotas in its ad unless it received clearance from Toyota corporate.

I’m not talking about fairness; that’s a separate (though also important) issue. Rather, I’m talking about relevance. If I search for “Toyota”, and a dealership selling Toyotas appears, then that is relevant. I gots no problem with that.

It’s when I search for Toyota, and someone has bid against that keyword.. for a Honda ad to appear. That’s where I have a problem. And this is the type of ad that Google is now allowing more of, correct?

Some of the blame may fall on the advertiser, for loose groupings, as NG says. But ultimately, Google is the one responsible for its own algorithms, and whether it even allows such groupings in the first place. Google’s ultimately responsibility is to the user, and to relevance. And if they aren’t watching out for that, and putting mechanisms in place to avoid these situations, then that leave me, as a user, extremely unsatisfied.

I think some of you are missing the point. Honda would bid on the Toyota keyword and then run an ad that says something along the lines of “Honda Accord gets 20% better mpg than Toyota Camry”

Honda is leveraging Toyota’s trademark for their advertising, which is fine as long as it’s fair use. But now let’s say someone other than Honda uses the trademark and deceives people through their keyword ad, for example making it look as though they sell Toyotas, when in fact they don’t. Is this deceptive use of Toyota’s trademark a fair use? Also, is Google facilitating this deceptive use in commerce by suggesting or recommending the competitive trademark through their tools?

There’s still a lot of slippery legal issues to be worked out in this area.

I think some of you are missing the point. Honda would bid on the Toyota keyword and then run an ad that says something along the lines of “Honda Accord gets 20% better mpg than Toyota Camry”

No, I completely get the point. This is exactly what Honda would do. That is exactly the point.

And it would be good for Honda. But is it what the user asked for; is it relevant to the user’s query for “Toyota”? From the user’s perspective, the Honda is not what they were searching for, and is therefore irrelevant.

So, slippery legal issues aside, I have to question the internal ethics of this move, simply because it goes against Google’s own, self-stated core values, the ones that justify Google’s ability to show advertising in the first place. This is from Google’s mouth, not mine. “We will only show advertising if it is relevant to what the user wishes to find”.

If I type “Toyota” and “Honda” comes up, then that may be good marketing, and might get me to change my mind, and change what I think is relevant. But it is NOT what I initially asked for, not what I said would be relevant, and if the marketing fails in changing my mind about what I originally though was relevant, will continue to be irrelevant.

Google’s promise to us, the users, was that it will only show advertising if it is relevant.